Endicott Interconnect mum on possible recent layoffs

Jan. 25, 2013

Endicott Interconnect executives have declined since October to answer repeated questions from the Press & Sun-Bulletin about layoffs. The company previously confirmed layoffs in November 2010 and October 2011. / KRISTOPHER RADDER / Staff Photo

ENDICOTT — Endicott Interconnect Technologies has benefited from more than $15 million in state tax credits since 2002. But that public investment fails to bring any answers about possible recent layoffs at the privately held firm.

The company, one of Greater Binghamton’s largest employers, has refused to respond to questions about whether it laid off a portion of its work force early this month.

Endicott Mayor John Bertoni, among those frustrated by the company’s silence, said his office has been flooded with calls from concerned residents recently but he hasn’t heard from the company itself in more than a year.

“I wish there was better communication,” Bertoni said. “They’re keeping us in the dark.”

Endicott Interconnect executives have declined since October to answer repeated questions from the Press & Sun-Bulletin about successive rounds of layoffs. The company previously confirmed layoffs in November 2010 and October 2011.

Lee Conrad, president of the Broome-Tioga Federation of Labor, said the company has had a series of job cuts all through 2012 that brought the Endicott Interconnect employee population down “quite a bit.”

That’s not counting any layoffs in the first few days of this year.

“There are lots of rumors about the health of the company,” Conrad said. “EI needs to come forward and either dispel these rumors or confirm what’s going on, considering all the taxpayer money they’ve received.”

Subsidies

In 2002, elected officials and local business leaders became concerned that IBM Corp.’s microelectronics division would leave the area, taking 4,000 jobs with it and leaving vacant its 4.1-million-square-foot production facility in the Village of Endicott’s core.

In a deal brokered by officials including Sen. Thomas W. Libous, R-Binghamton, and then-Gov. George Pataki, local entrepreneurs formed Endicott Interconnect Technologies Inc. and purchased 62 buildings on the campus for $65 million, agreeing to invest another $35 million in improvements.

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As part of the deal, IBM leased back 1.4 million square feet to house 2,000 remaining workers there. Pataki and officials expected EI to retain 2,000 jobs, too.

“All 4,000 jobs are going to be protected and remain in Endicott for at least the next 10 years,” Pataki told hundreds of IBM employees and community leaders at a July 1, 2002, ceremony announcing the deal, according to Press & Sun-Bulletin archives.

But according to documents obtained by this newspaper through the state Freedom of Information Law, the state’s investment in EI hasn’t quite lived up to its job retention expectations.

When it certified the tax breaks for EI through the state Empire Zone program in 2002, the Empire State Development Corp. — the economic development arm of state government — projected 1,600 jobs would stay at the company.

EI has benefited from $10.8 million in wage tax credits, $3.1 million in investment tax credits and $1.3 million in sales tax credits between 2002 and 2010, documents show.

However, only 1,466 full-time workers remained by the end of 2010.

ESD spokesman Jason Conwall said EI has invested more than $65 million since 2002 and “created nearly 1,500 local jobs in the process and helped grow the local economy by generating more than $60 million in annual payroll.”

“As a major employer in the area, the results produced by this company have provided a significant boost to the local economy and should be considered successful based on anyone’s metrics,” Conwall said.

Libous said the state’s efforts to save 4,000 jobs a decade ago was the right thing to do at the time.

“It was more than just helping EI get started,” he said. “It was about saving the entire campus, and I think what we did was the right thing to do at the time.”

Job cuts

Although state officials defend the benefits that have been granted to EI over the past decade, current information on the outcome of the investments isn’t publicly accessible.

The latest government data on EI’s work force is years old — information from the company’s annual report due to the state covering the 2011 calendar year won’t be available until this spring — and unofficial numbers indicate there has been a dramatic reduction since 2010.

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By February 2012, EI’s work force had been reduced to 1,250 employees, according to the latest figures from the Broome County Industrial Development Agency.

Bettina Damiani, project director for the advocacy group Good Jobs New York, said more current work force information would help taxpayers and officials make better decisions about economic development funding.

“It’s really about transparency,” she said. “We can’t have an honest dialogue about how effective incentives are until we understand where they’re going and how they’re working.”

Under federal law, employers are required to make their layoffs public by filing a WARN notice with the U.S. Department of Labor if a plant is closed, or if at least 33 percent of the active work force is laid off in a 90-day period.

Other than that, a private company has no obligation to disclose changes to the size of its work force.

“That’s one of the troubling things,” said Conrad, whose organization represents 14,000 workers in labor unions within Broome and Tioga counties. “With a company that receives so much public money, these job cuts should not be secret.”

While CEO Jay McNamara has declined to respond to written questions concerning staffing levels for this story, indicators of financial turbulence at the firm aren’t hard to come by.

• In May, EI implemented a shared work program in light of “a temporary decline in business,” according to an internal document posted on the company’s website.

• Federal court documents show EI is embroiled in an $11.5 million lawsuit alleging it defaulted in October on the rent for its corporate jet, which costs the company $76,951 per month, according to court documents.

In an e-mailed statement about the jet, McNamara said the company “is in compliance and current with the terms of the lease, and as a result, the lawsuit is being resolved.”

Attorneys for Connecticut-based Canal Air LLC, the plaintiffs in the lawsuit and a wholly owned subsidiary of General Electric Capital Corp., did not respond to a request for comment.